How Wars in Foreign Countries Influence Inflation and Expectations

That is what Olivier Coibion and Yuriy Gorodnichenko explore in our most recent blog post "When Foreign Wars Abroad Hit Wallets at Home".

New working paper:

The Dynamics of Technology Transfer: Multinational Investment in China and Rising Global Competition

by @jaedochoi.bsky.social, George Cui, Younghun Shim & Yongseok Shin.

Link to the paper as well as other working papers of our center: sites.utexas.edu/macro/resear...

New (updated) working paper:

The Inflation Attention Threshold and Inflation Surges by
@pfaeutiecon.bsky.social
.

Link to the paper as well as other working papers of our center:
sites.utexas.edu/macro/resear...

How does news about the US economy affect the rest of the world?

➡️ after US macroeconomic news releases, global stock prices respond immediately and in a synchronized way.
➡️ effects are large: Foreign countries’ stock prices respond with magnitudes similar to US stock market.

Only short-term expectations (and inflation perceptions) are meaningfully correlated w/ expected wage growth. Long-run inflation expectations have essentially no predictive power.

As inflation began rising in 2022, firms initially underreacted: short-term expectations rose more slowly than actual inflation. This gave way to persistent overshooting—firms expected more inflation than actually materialized, especially in the disinflation phase in 2023–2024.

Now also out as a EMPCT working paper!

Link: sites.utexas.edu/macro/resear...

Want to know more about firms' inflation expectations during the recent inflation surge? And how do their expectations correlate w/ wage expectations and firms' price setting?

Check out the new EMPCT working paper by @erwan-gautier.bsky.social, Savignac & Coibion: sites.utexas.edu/macro/resear...

Once these differences are corrected, the NY Fed SCE looks much more like the MSC

What's happening with inflation expectations?

Two often used household surveys disagree:

- the Michigan MSC says inflation expectations are up
- the NY Fed SCE says they're not...

Which one is it?

New blog by Oli Coibion and @ygorodnichenko.bsky.social says: MSC is right!

Find out why ⬇️

Starting tomorrow: 𝐓𝐄𝐗𝐀𝐒 𝐌𝐎𝐍𝐄𝐓𝐀𝐑𝐘 𝐂𝐎𝐍𝐅𝐄𝐑𝐄𝐍𝐂𝐄

We have a great line-up of speakers & discussants (program below)

including @alpsimsek.bsky.social, @kronerniklas.bsky.social, @pfaeutiecon.bsky.social, @mathpedemonte.bsky.social, @hugolhuillier.com, @elpuntoderocio.bsky.social
(+ some not on here)

... however, the global trading system reconfigured itself into distinct blocs.

Global trade remained resilient...

Link to the associated working paper: sites.utexas.edu/macro/2025/0...

How quickly will workers adapt to AI-driven changes?

New blog post:

𝐒𝐤𝐢𝐥𝐥 𝐒𝐩𝐞𝐜𝐢𝐟𝐢𝐜𝐢𝐭𝐲 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐏𝐚𝐜𝐞 𝐨𝐟 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐢𝐜𝐚𝐥 𝐂𝐡𝐚𝐧𝐠𝐞: 𝐋𝐞𝐬𝐬𝐨𝐧𝐬 𝐟𝐫𝐨𝐦 𝐇𝐢𝐬𝐭𝐨𝐫𝐲

by @nityanayar.bsky.social, Beraja & Adao

Link: sites.utexas.edu/macro/2025/0...

Congratulations @nityanayar.bsky.social , Andrei Levchenko and Zhen Huo on your publication of "International Comovement in the Global Production Network" in @reveconstudies.bsky.social 🥳

Link to the paper: academic.oup.com/restud/artic...

Congratulations to @pfaeutiecon.bsky.social for his publication in the current issue of the Journal of Monetary Economics JME, co-authored with @klaus-adam.bsky.social and @treinelt.bsky.social!

www.sciencedirect.com/journal/jour...

As climate change intensifies, extreme weather events like the fires in LA pose growing threats to economies.

A blog post by @nityanayar.bsky.social, Juanma Castro-Vincenzi, Gaurav Khanna and @nicomorales.bsky.social discusses how firms adapt supply chains to these risks:
tinyurl.com/abbw5mt3